The Federal Opposition is calling for Attorney-General George Brandis to be sacked over a "secret" deal struck with the West Australian Government allowing it to claw back nearly $1 billion from the collapse of Alan Bond's Bell Group.

Key points:

WA attempted to pass legislation allowing it to decide how to divide settlement from collapse of Alan Bond's Bell Group

The West Australian reports the Commonwealth ignored the related constitutional issues

Deal was stopped by then solicitor-general Justin Gleeson who wrote a submission to the High Court

In May, the High Court struck down WA legislation that would have given the state the power to decide how to carve up the settlement following the collapse of the Bell Group in the 1990s.

According to The West Australian, the Commonwealth was aware of the constitutional issues regarding the legislation, but in a bid to end more than two decades of litigation, it assured WA it would not stand in the way of the move and directed its then solicitor-general, Justin Gleeson, not to "run a particular argument" in court.

However, the report claims the deal was scuttled by Mr Gleeson, who wrote a scathing submission to the High Court on behalf of the Australian Tax Office — which was separately trying to claw back $300 million — and that this strengthened the case against WA.

Mr Gleeson's intervention reportedly led to a "blazing row" between Senator Brandis and his West Australian counterpart Michael Mischin, and contributed to the break-down in the relationship between Mr Gleeson and Senator Brandis.

Shadow attorney-general Mark Dreyfus described the story as "extraordinary" and said it appeared Senator Brandis had favoured "the political interests of the West Australian Liberal Party" over his duty to the Commonwealth.

"The story suggests that he has directed, or sought to direct, the former solicitor-general, Justin Gleeson, to not run an argument in the High Court of Australia in a case that concerned a special act from the West Australian Parliament, which the Commonwealth tax commissioner said was invalid," he said.

"He's got to go and Mr Turnbull needs to act."

Finance Minister Mathias Cormann dismissed the call, saying Mr Dreyfus and Opposition Leader Bill Shorten had a long history of "over-reach" when it came to the Attorney-General and were "just getting ahead of themselves".

That directive was issued after the High Court hearing but was repealed earlier this month.

A spokesman for the Attorney-General said the Government did not comment on litigation in which the Commonwealth was a party.

Mischin 'has to be sacked'

Meanwhile, the West Australian Opposition has called for the resignation of Mr Mischin.

"The Attorney-General of Western Australia entered into an agreement with the Commonwealth Attorney-General to keep certain facts and legal submissions back from the High Court to protect what Attorney-General Mischin knew to be unconstitutional legislation," Opposition justice spokesman John Quigley said.

Mr Quigley said there needed to be an investigation into the agreement reached between the two Governments that sought to shield unconstitutional legislation from High Court scrutiny.

"This Attorney-General [Mischin] has to be sacked," Mr Quigley said.

"The first duty of any Attorney-General is to ensure that the laws of the state and Commonwealth are properly applied."

'What I have done has been in the best interests', Mischin says

However, the Mr Mischin has defended the Barnett Government's attempt to secure an agreement with the Commonwealth.

He denies it was a "secret" deal, but has confirmed there were discussions between himself and Senator Brandis, and WA Treasurer Mike Nahan and his federal counterpart

Mr Mischin said his discussions with the Commonwealth were not an attempt to operate outside the law.

"I was totally aware of what the law was and was trying to achieve an end along with Treasurer Nahan and Western Australian legal advisers that would bring an end to this costly litigation," he said.

"What I have done has been in the best interests, in accordance with law and principle, and I am very comfortable with what I have been doing with this."

Mr Mischin said the failure of the legislation meant there was now no end in sight to the Bell litigation, and the probability much of the $1.75 billion settlement would be consumed through future legal action.

"It's like one of those Dickensian cases from Bleak House which goes on forever long after the people who originally caused it are dead," he said.

"What we're worried about is the amount of money that is being spent, that has been invested by the state, to get that pool of money, and it's probably going to be dissipated by the time we get to the end of it."

Mr Mischin dismissed calls from Mr Quigley for his resignation.

"If he thinks I've been involved in any improper conduct, well he's very familiar with the Corruption and Crime Commission. He's no stranger to that, he knows where to go," he said.

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